Morning Commentary: “Mutiny on the Bounty”

Foreign Exchange - Morning Commentary

“Mutiny on the Bounty”

Share this story:
Alan Rose
Alan Rose
Foreign Exchange Head Trader
The British pound has been on a roller coaster ride the past 48 hours. Yesterday, it appeared that a Brexit deal was in hand but it was not 100% clear that PM May's cabinet was on board. Nevertheless, the British pound (GBP) soared briefly before fading once again. Today has seen a number of members of PM May's cabinet resign over the Brexit deal  and brings back the possibility of lack of support within the Tory party for the agreement and or no support in Parliament potentially yielding a hard Brexit or even a no-Brexit outcome.
The market has reacted strongly, sending U.K. interest rates sharply lower and sending the GBP down by near 1.55%, coupled with a weak U.K. retail sales figure. A volatile period of political turmoil lies ahead regarding the standing of the Brexit negotiation with an increasing possibility that PM May could face a no-confidence vote.
While headlines will focus on the Brexit chess pieces, the EU is unlikely to go to square one with a new Tory government or even a Labor government complicating matters more. If no Brexit deal can be struck by the deadline early next year, the U.K. would be ejected from the EU with no transition period making things even more disruptive. Continue to expect the GBP to remain volatile as headlines will cause rapid changes in sentiment.
  • U.S. Retail sales for October came in well above expectations at 0.8% and is the sharpest increase in the past five months. Ex-autos also came in above expectations at 0.7%. 70% of U.S. GDP is based on consumer spending so this is another positive sign about the U.S. economy.  However, U.S. interest rates are lower on the session reacting to weaker equity performance in Europe and at the NY opening. U.S. interest rates are down four days in a row.
If we can help you with any Foreign Exchange needs, please email or call (800) 447‑4133.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Facebook Twitter LinkedIn Google Plus YouTube
Investment and Insurance Products:
Are Not insured by the FDIC or any other federal government agency
Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
May Lose Value
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Unsubscribe from this list  |  Update email preferences
This message has been sent to Please do not reply to this email. To ensure the delivery of future emails, please add to your email address book or safe sender list.
Copyright ©2018 City National Bank – All Rights Reserved.
350 South Grand Avenue, 12th Floor, Los Angeles, CA 90071
City National Bank is a subsidiary of Royal Bank of Canada.
Equal Housing Lender
NMLSR ID# 536994 | City National Bank Member FDIC


Popular posts from this blog

Fidelity: Bollinger band stock signal

Viewpoints: What to do after a data breach